State aid could secure a future for UK coal mining and save taxpayers money

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State aid could secure a future for UK coal mining and save taxpayers money

The TUC has today (Friday) written to government ministers asking them to secure a future for UK coal mining and the 2,000 jobs it supports by applying for EU state aid – a policy that could also save taxpayers money.

The government is currently allowing the managed closure of two of Britain’s last three coal mines – Thorseby in Nottinghamshire and Kellingley in Yorkshire – by the end of 2015. This will cause 1,300 skilled job losses, as well as hundreds more in supply chain jobs linked to the mines, and leave Hatfield Colliery as the last remaining deep pit mine in Britain.

However, a successful government application for EU state aid would enable both mines to stay open until at least 2018. This could save jobs and secure the immediate future for Britain’s coal mines, says the TUC. It also holds out the prospect of their longer-term viability as Carbon Capture Storage (CCS) technology reduces the environmental cost of coal mining.

Keeping Britain’s mines open through state aid could also save the taxpayer money, says the TUC. The cost of state aid – estimated at around £63-£74m – could easily be covered by the £86m of extra profits generated between 2015 and 2018 from over £500m in coal revenues, according to a new TUC-commissioned report published today.

The report, written by Orion Innovations, argues that an early closure of Thoresby and Kellingley mines would be bad for the workforce, their local communities and the wider economy. It says that an early closure would cost:

  • 2,600 years of lost employment given the expected time taken for miners to find new employment, with significant costs in social security payments
  • a £163m loss in employee income, and a £75m loss to the exchequer in terms of income tax and national insurance contributions
  • a £1bn loss in company revenues.

In a letter to Energy Minister Michael Fallon and Business Secretary Vince Cable, the TUC has also warned that allowing the mines to close by failing to apply for state aid would jeopardise the UK’s energy security, not least given our high reliance on Russian coal in a time of troubled relations between Europe and Russia.

TUC General Secretary Frances O’Grady said: “Recent events in the Ukraine should have made clear the importance of having a secure domestic energy supply.

“Instead the government is allowing two of Britain’s three remaining coal mines to close, causing the unnecessary loss of 1,300 skilled jobs and leaving us even more exposed to fluctuations in the price of imported coal.

“But British coal mining does have a future if the government wants it to. An application for state aid would be cost neutral, save jobs and help ensure that UK mined coal supports our emerging CCS industry. The profits from extra coal production would save the taxpayer money too.

“With thousands of jobs and the UK’s energy security at stake, ministers must put aside their reluctance to intervene and apply for EU state aid. It would madness to allow the closure of British mines when countries like Germany and Spain are using far greater amounts of state aid to bolster their own domestic coal supply.”

Director of CoalPro, the UK Coal Producers’ Association, Phil Garner said: “There is a strong case for the UK government to provide financial aid to our remaining underground coal mines.

“This would maintain access to significant coal reserves, ensure that the employees continued in work and provide additional security of supply of fuel. If we are to develop CCS projects it would be ironic if there were no indigenous coal to supply them.

“Market prices will change and UK production can help to ensure that consumers are not exposed to coal price spikes in the future.”

NOTES TO EDITORS:

- The report Merits of UK Coal State Aid Application was written by Orion Innovations for the TUC and National Union of Mineworkers. It is available at www.tuc.org.uk/sites/default/files/UK%20Coal%20State%20Aid%20Report.doc.

- All TUC press releases can be found at www.tuc.org.uk

- Follow the TUC on Twitter: @tucnews

Contacts:

Media enquiries:
Liz Chinchen   T: 020 7467 1248    M: 07778 158175    E: media@tuc.org.uk
Rob Holdsworth    T: 020 7467 1372    M: 07717 531150     E: rholdsworth@tuc.org.uk

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